The Marginal Excess Burden of Different Capital Tax Instruments

Marginal excess burden, defined as the change in deadweight loss for an additional dollar of tax revenue, has been measured for labor taxes, output taxes, and capital taxes generally. This paper points out that there is no we1 1-defined way to raise capital taxes in general, because the taxation of income from capital depends on many different policy instruments including the statutory corporate income tax rate, the investment tax credit rate, depreciation lifetimes, declining balance rates for depreciation allowances, and personal tax rates on noncorporate income, interest receipts, dividends, and capital gains. Marginal excess burden is measured for each of these different capital tax instruments, using a general equilibrium model that encompasses distortions in the allocation of real resources over time, among industries, between the corporate and noncorporate sectors, and among diverse types of equipment, structures, inventories, and land. Although numerical results are sensitive to specifications for key substitution elasticity parameters, important qualitative results are not. We find that an increase in the corporate rate has the highest marginal excess burden, because it distorts intersectoral and interasset decisions as well as intertemporal decisions. At the other extreme, an investment tax credit reduction has negative marginal excess burden because it raises revenue while reducing interasset distortions more than it increases intertemporal distortions. In general, we find that marginal excess burdens of different capital tax instruments vary significantly. They can be more or less than the marginal excess burden of the payroll tax or the progressive personal income tax.

A Disaggregate Equilibrium Model of the Tax Distortions Among Assets, Sectors, and Industries

This paper encompasses multiple sources of inefficiency introduced by the U.S. tax system into a single general equilibrium model. Using disaggregate calculations of user cost, we measure interasset distortions from the differential taxation of many types of assets. Simultaneously, we model the intersectoral distortions from the differential treatment of the corporate sector, noncorporate sector, and owner-occupied housing. Industries in the model have different uses of assets and degrees of incorporation. Results indicate that distortions between sectors are much smaller than those of the Harberger model. Distortions among industries arealso much smaller than those in models using average effective tax rates. Distortions among assets are larger, but the total of all these welfare costs is still below one percent of income.

Long-Run Effects of the Accelerated Cost Recovery System

Much of the debate surrounding the enactment of President Reagan's tax plan was concerned with the short run effects of macroeconomic stimulation. Now that the Economic Recovery Tax Act of 1981 has become law, it is appropriate to look again at the long run effect of these tax cuts. This paper measures, for 37 different assets and for 18 different industries, the reduction in effective corporate tax rates that result from the acceleration of depreciation allowances and the expansion of the investment tax credit. It also uses a detailed dynamic general equilibrium model of the U.S. economy to simulate the effects of the new Accelerated Cost Recovery System (ACRS) on revenues, investment, long run growth, and capital allocation among industries. We find significant welfare gains from ACRS, but we find larger welfare gains from alternative plans that were not adopted.

The effects of clumping on wind line variability

We review the effects of clumping on the profiles of resonance doublets. By allowing the ratio of the doublet oscillator strenghts to be a free parameter, we demonstrate that doublet profiles contain more information than is normally utilized. In clumped (or porous) winds, this ratio can lies between unity and the ratio of the f-values, and can change as a function of velocity and time, depending on the fraction of the stellar disk that is covered by material moving at a particular velocity at a given moment. Using these insights, we present the results of SEI modeling of a sample of B supergiants, zeta Pup and a time series for a star whose terminal velocity is low enough to make the components of its Si IV 1400 doublet independent. These results are interpreted within the framework of the Oskinova et al. (2007) model, and demonstrate how the doublet profiles can be used to extract infromation about wind structure.Comment: 3 pages, to appear in Clumping in Hot Star Winds, W.-R. Hamann, A. Feldmeier & L. Oskinova, eds., Potsdam: Univ.-Verl., 2007, URN: http://nbn-resolving.de/urn:nbn:de:kobv:517-opus-1398

Mass loss rates from mid-IR excesses in LMC and SMC O stars

We use a combination of BVJHK and Spitzer [3.6], [5.8] and [8.0] photometry to determine IR excesses for a sample of 58 LMC and 46 SMC O stars. This sample is ideal for determining IR excesses because the very small line of sight reddening minimizes uncertainties due to extinction corrections. We use the core-halo model developed by Lamers & Waters (1984a) to translate the excesses into mass loss rates and demonstrate that the results of this simple model agree with the more sophisticated CMFGEN models to within a factor of 2. Taken at face value, the derived mass loss rates are larger than those predicted by Vink et al. (2001), and the magnitude of the disagreement increases with decreasing luminosity. However, the IR excesses need not imply large mass loss rates. Instead, we argue that they probably indicate that the outer atmospheres of O stars contain complex structures and that their winds are launched with much smaller velocity gradients than normally assumed. If this is the case, it could affect the theoretical and observational interpretations of the "weak wind" problem, where classical mass loss indicators suggest that the mass loss rates of lower luminosity O stars are far less than expected.Comment: 15 pages, 10 figures. Accepted for publication in MNRA

A Comparison of Methodologies in Empirical General Equilibrium Models of Taxation

Computational general equilibrium models have proven useful in the area of long run analysis of alternative tax policies. A sizable number of studies have been completed which examine policies such as a value-added tax, corporate and personal income tax integration, a consumption or expenditure tax, housing subsidies, and inflation indexation.. This paper reviews the methodologies used in these models. We focus on eight specific models and review in turn: levels of disaggregation, specification of the foreign sector, financial modeling, the measurement of effective tax rates, heterogeneity and imperfect mobility, factor supply, treatment of the government budget, and technical issues associated with implementation. The paper includes some new experiments in connection with simulations of integration of the personal and corporate income tax systems in the United States. We compare the resulting welfare gains in models with different levels of disaggregation, and we discuss alternative justifications for specific disaggregations. We also examine the sensitivity of results to alternative specifications of households' endowments of labor and leisure. Our survey underscores the importance of the assumed elasticities of labor supply with respect to the net of tax wage, and of saving with respect to the net of tax rate of return. Unfortunately, these are also parameters for which there is not a consensus in the economics profession. The survey finds that there are several aspects of modeling that are especially ripe for further progress: the roles of government and business financial decisions, the dynamics of a life-cycle approach, and the measurement of incentive tax and transfer rates.

Structure and clumping in the fast wind of NGC6543

Far-UV spectroscopy from the FUSE satellite is analysed to uniquely probe spatial structure and clumping in the fast wind of the central star of the H-rich planetary nebula NGC6543 (HD164963). Time-series data of the unsaturated PV 1118, 1128 resonance line P Cygni profiles provide a very sensitive diagnostic of variable wind conditions in the outflow. We report on the discovery of episodic and recurrent optical depth enhancements in the PV absorption troughs, with some evidence for a 0.17-day modulation time-scale. SEI line-synthesis modelling is used to derive physical properties, including the optical depth evolution of individual `events'. The characteristics of these features are essentially identical to the `discrete absorption components' (DACs) commonly seen in the UV lines of massive OB stars. We have also employed the unified model atmosphere code CMFGEN to explore spectroscopic signatures of clumping, and report in particular on the clear sensitivity of the PV lines to the clump volume filling factor. The results presented here have implications for the downward revision of mass-loss rates in PN central stars. We conclude that the temporal structures seen in the PV lines of NGC6543 likely have a physical origin that is similar to that operating in massive, luminous stars, and may be related to near-surface perturbations caused by stellar pulsation and/or magnetic fields.Comment: 11 pages, 11 figures. Accepted for publication in MNRA

The Impact of Fundamental Tax Reform on the Allocation of Resources

Recent proposals for fundamental tax reform differ in their relative emphasis on interasset, intersectoral, interindustry, and intertemporal distortions. The model in this paper addresses these multiple issues in the design of taxes on capital incomes. It is capable of measuring the net effects of changes in statutory rates, credits, depreciation allowances, and other features such as the indexation of interest and capital gains. It can compare costs of capital for individual assets, sectors, arid industries, and it weighs these together to evaluate the impact on total investment incentives. In a fully general equilibrium system, it can simulate alternative resource allocations and associated changes in welfare. For the overall evaluation of alternative tax reform proposals, the simultaneous consideration of these multiple effects is crucial. The model is used to compare current law, the Treasury tax reform plan of November 1984, and the Presidents proposal of May 1985. Under the "new view" that dividend taxes have a small effect on investment incentives, both reforms would reduce interasset distortions and the Presidents plan would reduce intersectoral distortions, but the Treasury plan would exacerbate intertemporal distortions. Still, for most parameters, both reforms generate net welfare gains even with slight declines in the capital stock. Under the "old view" that dividend taxes have a significant effect on investment incentives, both plans reduce corporate taxation through their partial deductions for dividends paid. They thus reduce intersectoral distortions as well as differences among assets. Under this view, the Treasury plan no longer increases intertemporal distortions. Even for the least favorable set of parameters in this case, these reforms raise both the capital stock and the real value of output above their baseline values. Finally, the paper shows alternative allocations of capital among assets, sectors, and industries.

Paper Session II-B - U.S./ Russian EVA Interoperability Status

Guidance for the goals of U.S. and Russian cooperation in the International Space Station (ISS) was provided in an addendum to the Program Implementation Plan, dated November 1, 1993, which was jointly signed by the NASA Administrator and the RSA General Director. Subsequent working level agreements for Extravehicular Activity (EVA) have resulted in joint projects which are building confidence and capabilities for commonality of hardware and operations. Parallel EVA planning and implementation of the Shuttle missions to Mir and the assembly of ISS are proving beneficial to both programs. Experience in each program is being fed back into the other program. This paper describes the joint EVA efforts related to the Mir docking missions which are leading to the assembly of ISS. On-orbit EVA plans, external experiments, tools, suit components and training facilities which support specific missions as well as ISS preparations are discussed. Lessons learned to date show that a considerable similarity exists in the fundamentals of EVA physiology, hardware design, and task performance techniques between the systems of both countries. While technical differences do exist, they have not been significant obstacles and have more often led to joint opportunities. Recent successes illustrate the possibilities for mutual assistance and show that the opportunities and challenges of ISS EVA are achievable